October 2023

Directors & Officers: $5M Limits Up 205%
Technology Errors & Omissions: $2M Limits Up 106%
Employment Practices Liability: $1M Limits Up 60%

October has been quite a popular month for insurance shopping and quoting. Our data shows major increases in most limits of each of our core three startup policies, showcasing the seasonality of work that goes into preparing for the holidays. There were a few major highlights in all three core policies, however, that soared beyond the high tide that seems to have lifted most coverages.

• The “SEC effect” seems to be continuing into Q4. We are continuing to see increases in $5M limits for Directors & Officers policies, to the tune of a 205% increase between September and October. We are seeing a corresponding rise in cyber policies which, tied to the new SEC rule around executive liability for cyber attacks on publicly traded companies, merits the increase in higher limit policies. However, in contrast, technology errors & omissions and cyber liability policies saw an increase, but for lower limits.
• $2M limit policies were the star of the show to kick off Q4. While each of our limit options increased, we saw the largest in $2M policies, jumping up 106% from September. Unsurprising, especially as October officially marks the start of Cybersecurity Awareness Month. However, the focus on $2M policies, rather than lower limits of coverage, is interesting. Some increased concern may be attributed to our newly released 2023 Cyber Risk Index Report and seasonal interest in this particular policy. However, it will be interesting to see how this trend evolves moving into the holiday season.
• While there was some movement around the lower policy limits for EPLI policies, things remained fairly status quo, echoing what we saw in September. As layoff headlines make way for geopolitical concerns and cybercrime news, we may be seeing the public consciousness moving away from work-related concerns as the year comes to a close. We will monitor this activity as we continue into Q4, as organizations solidify planning and resource allocation for 2024.

Takeaway: October saw a major rebound on all policy types in response to a September dip. A strong start to Q4 for insurance shopping and may indicate some preparations going into end-of-year and the holiday season. While the biggest increases came for Directors & Officers and Tech E&O, these may be partially chalked up to seasonality and cyber awareness month. As we move into November and begin to see 2024 on the horizon, we expect to see a continued upward trend in shopping across policy types as businesses review their existing policies and prepare for the year ahead.

August 2023

Directors & Officers: 14% Increase in Shopped Policies
Technology Errors & Omissions: 20% Increase in $5M Limit Policies
Employment Practices Liability: 44% Increase in Shopped Policies

As Summer wanes, August seems to have brought increased awareness of people-related risk. While more organizations welcome team members back to the office and Summer vacations end, more startups are shopping for employee risk-related policies, and increasing their limits.

• Technology Errors & Omissions policies continued their upward trend in rising limits. Founders shopped for $5M limits to the tune of 20% of all Tech E&O policies. This marks the first time it has broken the 20% barrier in 2023. $3M limit policies also saw a new level of interest, breaking the 20% mark for 3 out of the 4 weeks of August, another feat not seen all year. These numbers indicate an increased concern in staff-related liability. As more employees are welcomed back to the office, we expected that this number may come down. However, this maybe precautionary, as many technology companies have slowed layoffs, but have yet to resume hiring. Reduced staff and increased workloads may contribute to errors & omissions that these organizations simply cannot afford.
• While limit distribution stayed largely the same, the total number of shopped D&O policies increased by 20% from July to August. This follows the increase in shopped overall EPLI policies in the rise in people-related risk. However, the recently released SEC rules on cyber risk definitely have a part to play here. Introduced at the tail-end of July, the SEC now requires companies to disclose risk management, strategy, and governance along with incident reports related to cyber attacks. This includes descriptions of companies’ board of directors’ and management’s role in overseeing cyber risks. As a result, this information could lead to upper management being found at fault for a cyber breach, and potentially being charged. According to multiple outlets, this decision will likely change the landscape of D&O insurance, and has surely contributed to the increase in shopped policies this summer.  
• Similar to D&O insurance, limit distribution for EPLI policies showed similar trends in August. However, Employment Practices Insurance saw the largest month-over-month increase in shopped policies, jumping 44% from July to August. As claims and big-profile employment practices cases continue to make headlines, the trend of interest in these policies is not altogether surprising. However, this big of a jump, in the middle of the summer, is a bit interesting. More organizations are asking their staff to come back into the office, at least part time. But, while many say that “full time office work is dead,” businesses are still concerned for the potential consequences of having more people back in the office. While this was a similar takeaway in July, we may see this trend occur for the foreseeable future.

Takeaway: Following July’s lead, August has continued the unseasonable heat in insurance shopping this summer. While we can attribute some of these policies to SEC rules and returning to the office, we can also throw social issues, workers’ rights, and other global affairs into the mix. As we move into the last month of the quarter, we will follow this trend as it either wanes or continues as the ramp up to the holidays season begins.

June 2023

Directors & Officers: 3% Increase for $3M Limits
Technology Errors & Omissions: 5% Increase for $3M and $5M Limits
Employment Practices Liability: Negligible Movement

As we approach the scorching Summer months, June hasn’t slowed the momentum built up from May’s turnaround, at least when it comes to startup insurance. But, nearing the first day of the new season, founders’ attention turned to the sea.

• The first week of June started off with a bang for companies looking for Tech E&O Cyber quotes with a 13% increase over the two previous record setting weeks (incidentally the week SVB collapsed and the week First Republic collapsed).
• June was on par for overall quotes in comparison with May, though there was also an uptick overall in the number of D&O quotes throughout the month (a 20% increase over April, but just a 3% increase over May).
• Higher limits were the name of the game, with D&O shoppers favoring $3M quotes (21% of shoppers picked $3M as compared to 18% in May and just 12% in April), and Tech E&O shoppers picking both $3M and $5M quotes more often than in previous months (20% chose $3M in June as compared to 15% in May, and 16% chose $5M as compared to 12% in May).
• The week of June 18th saw a 12% decrease in overall quotes, as the world waited to find out the fate of the Titan submersible. What’s notable, however, is that the week of June 19th in 2022 saw a 24% drop from the previous week as well. So perhaps people just aren’t thinking about business risks that week, or the first day of Summer is on everyone’s mind.

Takeaway:

The momentum built by May’s comeback is ongoing. While Summer generally means an insurance shopping slowdown, 2023 continues to surprise. The influence of yet another catastrophic bank failure can’t be overlooked, however, and the seasonality of the last weeks of this month are an interesting anecdote to keep in mind. Overall, as we move into Q3, we may see these numbers flatten as vacations start and minds are elsewhere.

April 2023

Directors & Officers: 89% Increase for $2M Limits
Technology Errors & Omissions: 30% Increase for $5M Limits
Employment Practices Liability: 32% Increase in $2M Limits

Startups seem to have settled in the month of April after the frenzy of March around the collapse of SVB.

• High limits for Tech E&O, Cyber are still preferred with a 30% increase in quotes for the $5M limit. This was a result of drops in both the $1M and $2M limit quotes.
• D&O quotes have also settled since the collapse, with the lower limits being more popular again. There was an 89% increase in $2M quotes from March to April for D&O.
• EPLI quotes remained largely unchanged from March, until a big spike from $1M to $2M policies that worked out to about a 32% increase in $2M limits.

Takeaway: While things seems to have settled for startups, they still appear acutely aware of the risks and are taking steps to transfer those risks via insurance. We can see founders/ short-term memory at play with the decrease in D&O limits, while the sudden limit increases around Tech E&O, Cyber and EPLI speak to concerns around employment practices. The tech industry, among others, have experienced another round of layoffs, highlighted by LinkedIn, near the end of April. This may be on the minds of founders as they head into the Summer months.

Risk Reactivity: Q1 2023 Summary

Directors & Officers Insurance

In this quarter, we saw some interesting moves in this insurance type. Namely as a result of the collapse of Silicon Valley Bank (SVB). The forced closure of SVB on March 5, 2023, had an immediate impact on how founders were shopping for insurance. Searches for $3 million limit D&O quotes more than doubled from 7% on March 5 to 15% only four days later. In the week of March 12, just 10 days after the closure, quote searches skyrocketed 62%. Initially, these searches were for high-coverage amounts, causing the performance of $1 million quotes to decline; D&O quotes dropped by 37%.

Tech Errors & Omissions Insurance

On March 2, The White House released a momentous cybersecurity strategy. This triggered a trend among startups; searches for Tech E&O policies jumped 33% following the announcement. This set the first record in 2023, beaten only by the rush of shoppers after the SVB closure. More shoppers elected for higher rates, however, rather than hedging their bets with the lowest level of coverage. It seems that shoppers sought comfort in liability transfer, leading to a record number of quotes across all policies available through Embroker: EPL, Tech E&O, D&O and Fiduciary.

Employment Practices Liability Insurance

Similar to D&O and Tech E&O, there was some volatility around EPLI as a result of the SVB closure. It seems that founders (and possibly their boards), were concerned with the potential legal ramifications of lost payroll, unpaid vendors, and more. These kinds of financial conditions put businesses at risk of suits that these insurance policies may cover.

Around this time, the number of $1M limit EPLI policies dropped by over 25% immediately following the SVB news, as startups opted for more coverage. However, nearing the end of the quarter, we saw the number of $1M limit policies resurge as frugality seemingly returned: $1M EPLI policies jumped 42% in this time.